Trading the forex market comes with some underlying odds against a trader which include spread, swap cost, etc. The spread of the market is one of the most important factors that can either make or mar your success as a forex trader. The adverse effect of wide spread is even more pronounced on scalpers that tend to take advantage of small moves from the market.
Opening a trade position with a sudden widespread increase can magnify your losses when the market is retraced with few pips. The Spread.Warner can come in handy to help you keep a tab on the constant changes in the value of the market spread.
The Sudden Widening of Spread
Many experienced traders can relate to the menace of sudden widening of spread which most times curses higher loss than what was bargained. To this end, the Spread.Warner indicator is designed to warn you early of the abnormal value of the current spread.
The Spread.Warner indicator can potentially improve your profits because it helps you avoid trades with abnormal spreads. This is important in trading because when you open a trade blindly without knowing what the current spread is, your losses may exceed the standard figure.
Widening of spread is sometimes inevitable in the forex market due to some reasons which include:
- Increased volatility due to fundamentals (economic news release).
- When the price is at a significant level.
- Low liquidity in the market.
How To Use The Indicator
The Spread.Warner indicator is integrated with parameters to track the spread deviation from the normal spread value. The obtained deviation value is thereafter depicted with colors on your chart.
The indicator can be used to reduce the odds of the forex market against you. Let's consider a few typical scenarios where this indicator would come in handy.
Scenario #1: Suppose you want to scalp a few pips from the market and exit almost immediately, then spread can't be ignored. You don't want to be caught in a market that is widespread because it would adversely affect your trade.
The Spread.Warner helps scalpers to avoid short trades that would likely end up with a negative value even at your exit (Take Profit) point. What's more, it also helps you to quickly cut your loss that may be triggered by a sudden widening of the spread.
Scenario #2: Suppose your trading strategy relies on trend breakouts, you may need to check the indicator for a potential widening of the spread. Opening trades during a sudden widened spread caused by breakouts may significantly affect your stop-loss order negatively.
Note that as the price reaches a significant level that needs to be broken, it would require high volatility to break through it. This may cause the market liquidity to drop which in turn results in an abnormal increase in spread.
Indicator Settings
The Spread.Warner indicator does have a few settings that can be customized by users should the need arise.
Buffer Length - this shows the value of the current spread in a histogram format.
Collect Spread - this parameter enables the indicator to draw a new bar as the value of spread changes.
Indicator Position - this is used to determine the position of the indicator's default panel.
Color Scheme - this option allows users to choose their preferred color.
Indicator installation
Download Link
1. Download and unzip the archive to the MQL4 folder of the terminal;
2. Restart the terminal and run the indicator;
3. Allow import of DLLs.
